IMRO reprimands Keith Percy former Chief Executive of Morgan Grenfell

IMRO has today announced that it has settled its disciplinary proceedings against Keith Percy and reprimanded him. Keith Percy was formerly Global Business Head of the Asset Management Division of Deutsche Morgan Grenfell and the Chief Executive of Morgan Grenfell Asset Management Limited (MGAM). He had overall responsibility for the activities of the MGAM Group, including compliance. The day to day operation of the compliance function and the day to day management of MGAMs fund managers were undertaken by others within the MGAM Group who reported to Percy.

Background facts
In April 1996, Keith Percy and his management team were informed that the European Growth unit trust held 33% in unlisted securities and that full documentation about those unlisted securities was not available. Keith Percy took steps to instigate an internal review of the portfolios holdings and implement management changes aimed to deal with the situation. Nevertheless, as Chief Executive of MGAM, Keith Percy should have done more to satisfy himself personally that the advice and progress reports he was receiving from his colleagues were correct. Keith Percy has therefore accepted that he did not take adequate steps to: require the compliance department to investigate and report to him on how the state of affairs with European Growth had been allowed to occur; ensure that senior management obtained full information as to precisely what documentation was unavailable; and inform IMRO of the state of affairs, particularly in June 1996 when he knew that despite the internal review and management changes instigated by him, the level of investment in unlisted securities in European Growth remained high and full documentation was still not available.

Serious irregularities in the management of the European Growth and Capital Growth unit trusts were subsequently discovered by IMRO towards the end of August 1996. The funds were suspended by Morgan Grenfell on 2 September 1996, and trading recommenced on 5 September 1996 after Morgan Grenfell's parent company, Deutsche Bank, had purchased certain unlisted securities from the funds for approximately 180 million. Morgan Grenfell then entered into a compensation agreement with IMRO on 20 December 1996, in which a compensation mechanism was agreed and it undertook to compensate investors in the funds for losses from the serious irregularities. The total compensation package amounted to a sum in excess of 210 million for some 180,000 investors. IMRO disciplined MGUTM and MGIFM on 16 April 1997 with a fine of 2,000,000 and costs of 1,003,000. IMRO subsequently disciplined five individuals within MGAM and the trustees of the funds.

The breaches admitted by Keith Percy 1 - Ensuring that MGIFM and MGUTM complied with the Unit Trust Regulations From April 1996 to August 1996 Keith Percy did not ensure that all reasonable steps were taken and all due diligence exercised to avoid European Growth and Capital Growth being managed contrary to the Regulations. In particular he did not: ensure that senior management swiftly obtained full documentation regarding the investments made by European Growth and Capital Growth; ensure that senior management established whether European Growth and Capital Growth were being managed in accordance with the applicable regulations; require the compliance department to report on how the state of affairs had been allowed to occur.

2 - Use of Corporate Action Vehicles From April 1996 to August 1996, Keith Percy did not require senior management and/or the compliance department to investigate thoroughly the unlisted companies created to acquire problem holdings in European Growth (Corporate Action Vehicles), to take legal advice, or to consult the Trustees of the funds, to satisfy themselves that they were proper investments for European Growth. 3 - Internal Procedures From April 1996 to August 1996 MGIFM and thereby MGUTM breached the IMRO Rules and Principle 9 in relation to internal procedures in that Keith Percy did not: ensure that senior management and/or the compliance department were satisfied that the unlisted securities were proper investments; and ensure that senior management and/or the compliance department swiftly obtained full documentation for the unlisted securities.

4 - Failure to inform IMRO From April 1996 to August 1996, Keith Percy did not seek independent legal advice about whether certain matters needed to be notified to IMRO and instead relied wholly on the compliance department and therefore he failed to ensure that IMRO was informed of those matters, including: the high level of investment made in unlisted securities; that documentation relating to the unlisted securities was incomplete; and that the risk profile of European Growth had become inappropriate for a fund of its nature.

The Settlement
In reprimanding Keith Percy, IMRO has taken into account that: Keith Percy has now accepted the breaches referred to above;

there is no allegation of dishonesty or lack of integrity in Keith Percys conduct; Keith Percys employment with Deutsche Morgan Grenfell was terminated in October 1996 and he did not carry out registrable activities until October 1998 when he became registered with IMRO subject to limitations pending the resolution of these disciplinary proceedings.

Costs
Keith Percy will pay IMROs investigation costs of 84,220 and a contribution to its disciplinary costs.

Notes to Editors
1. Keith Percy was Global Business Head of the Asset Management Division of Deutsche Morgan Grenfell and Chief Executive of Morgan Grenfell Asset Management Limited (MGAM). He became a Registered Individual of IMRO on 1 August 1994 and his registration became inactive on dismissal from Morgan Grenfell in October 1996. 2. Both Morgan Grenfell Unit Trust Managers Limited (MGUTM) (the operator of Morgan Grenfell European Growth Trust (European Growth)) and Morgan Grenfell Asset Management (Ireland) Limited (MGAM (I)) (the manager of the Morgan Grenfell European Capital Growth Fund (Capital Growth, a Dublin based UCITS) were ultimately wholly owned subsidiaries of MGAM. 3. MGUTM and MGAM (I) delegated management of European Growth and Capital Growth respectively to Morgan Grenfell International Funds Management Limited (MGIFM). Day to day management of the funds was undertaken by Peter Young, who was a director of MGIFM and who was promoted to director of MGAM on 1 April 1996. Young reported to the Chief Executive of MGIFM, who in turn reported to Keith Percy. 4. MGUTM was responsible for ensuring that European Growth was managed in compliance with the Unit Trust Regulations. MGUTM delegated the day to day management of European Growth to MGIFM. Where MGIFM failed to manage the funds in accordance with the Unit Trust Regulations, both it and MGUTM were in breach of the IMRO Rules and/or Statements of Principle. 5. MGIFM was also delegated responsibility to manage Capital Growth. Where MGIFM failed to manage Capital Growth in accordance with restrictions in the prospectus it was in breach of the Statements of Principle. 6. Irregularities in the management of European Growth and Capital Growth were discovered towards the end of August 1996. The irregularities were connected with (although not limited to) the activities of Peter Young ("Young"), who carried out day to day management of European Growth (from 28 March 1994) and Capital Growth (from 21 November 1994). Young was appointed a director of MGIFM with effect from 1 April 1994 and a director of MGAM with effect from 1 April 1996. 7. Following the recognition of serious irregularities, Young was suspended on 4 September 1996 and dismissed on 16 September 1996. Six other employees, including five directors,

then left between September 1996 and December 1996. 8. Three funds were suspended by Morgan Grenfell on 2 September 1996, and trading recommenced on 5 September 1996 after Morgan Grenfell's parent company, Deutsche Bank, had purchased certain securities from the funds for approximately 180 million. 9. Morgan Grenfell entered into a compensation agreement with IMRO on 20 December 1996, in which a compensation mechanism was agreed and it undertook to compensate investors in the three funds for losses from the serious irregularities. The total compensation package may amount to a sum in excess of 200 million. 10. IMRO disciplined MGUTM and MGIFM on 16 April 1997 with a fine of 2,000,000 and costs of 1,003,000. 11. IMRO subsequently disciplined five individuals. Glyn Owen, the former chief executive of MGIFM, was suspended for three years until 4 December 2000. Graham Kane, the former managing director of MGUTM and former director of MGAM (I), was suspended for a period of sixteen months until 4 April 1999. Michael Wheatley, a former director with compliance responsibilities, was suspended for a period of three years until 4 December 2000 and was permanently restricted from holding a compliance position. Paul Ebling, the former deputy head of compliance at MGAM and compliance officer of MGUTM, was suspended for a period of two years until 4 December 1999 and undertook not to apply for a senior compliance position for a further 12 months. Bruce Hacking, a former compliance officer, was reprimanded in February 1998. Press releases were previously issued in relation to those individuals on 26 February 1998 and 20 May 1998. 12. IMRO also subsequently disciplined the trustees of the unit trusts. General Accident was fined 120,000 and Royal Bank of Scotland was fined 290,000. Press releases were previously issued in relation to the trustees on 30 April 1998.

Explanation of the Charges

All Charges 13. Rule 5.1(4)(a) of Chapter VII of the IMRO Rules - provides that a registered individual must not act or omit to act in a way which causes a firm to be in breach of the Principles, the Rules, the Financial Services Act 1986 or any provision made under that Act. Charge 1 14. Principle 2 states that a firm should act with due skill, care and diligence. 15. RSR 5.09(2) and UCITS Regulation 45 and 46 provide that not more than 10% of the property of a fund may consist of securities which are unlisted or which were not issued on terms that they would obtain an appropriate listing within 12 months of their issue. Charge 2

16. Principle 2 states that a firm should act with due skill, care and diligence. Charge 3 17. Rule 1.1(1) of Chapter IV of the IMRO Rules provides that a firm must take reasonable steps to ensure that its officers and employees act in conformity with their own and their employers relevant responsibilities under the regulatory system. 18. Principle 9 provides that a firm should organise and control its internal affairs in a responsible manner and should have adequate arrangements to ensure that its staff and those for whom it is responsible in the conduct of investment business are suitable, adequately trained and properly supervised and that it has well defined compliance procedures. Charge 4 19. Principle 10 states that a firm should deal with its regulator in an open and cooperative manner and keep the regulator promptly informed of anything concerning the firm which it might reasonably be expected to be disclosed to it. 20. Rule 2.1(5) of Chapter VI of the IMRO Rules provides that each firm must keep IMRO promptly and fully informed of any matter of which it is aware directly affecting the firm, its Permitted Business and which a reasonable person would consider to be relevant to a consideration of the firms position under the Rules, or otherwise as a firm regulated by IMRO. 21. IMRO is set up under the Financial Services Act 1986 as the regulatory organisation covering the field of investment management. It regulates some 1,050 firms and 19,100 individuals. Firms include fund management organisations, banks, pension fund managers; unit trust managers, trustees (including trustees of unit trusts) and investment trust managers. Funds managed by IMRO - regulated firms have an estimated total value of 1,430 billion. IMRO aims to protect approximately 15 million investors. 22. Press enquiries to Judy Delaforce on 020 7676 3232 or 07669 139588 (after business hours). 1. INVESTMENT MANAGEMENT REGULATORY ORGANISATION LIMITED

KEITH PERCY STATEMENT OF CHARGE

Date: 6th January 1999 Ref: kep.soc.1.jjp.doc Charge 1 - Holdings of Unapproved Securities Keith Percy was the Global Business Head of the Asset Management Division of Deutsche Morgan Grenfell and the Chief Executive of Morgan Grenfell Asset Management Limited

("MGAM"). As such he had overall responsibility for the activities of the MGAM Group, including compliance. Both Morgan Grenfell Unit Trust Managers Limited ("MGUTM"), (the operator of Morgan Grenfell European Growth Trust ("European Growth")) and Morgan Grenfell Asset Management (Ireland) Limited ("MGAM(I)") (the manager of Morgan Grenfell Capital Growth ("Capital Growth")) were ultimately wholly owned subsidiaries of MGAM. MGUTM and MGAM(I) delegated management of European Growth and Capital Growth respectively to Morgan Grenfell International Funds Management Limited ("MGIFM"). Day to day management of the funds was undertaken by a director of MGIFM who was promoted to director of MGAM on 1 April 1996 and who reported to the chief executive of MGIFM who in turn reported to, amongst others, Keith Percy. From April 1996 to August 1996 Keith Percy by failing to act was one of the individuals who caused MGUTM and MGIFM to breach Rule 7.6(1) of Chapter II of the IMRO Rules, and Principle 2 of the Statements of Principle in relation to holdings of Unapproved Securities. From April 1996 to August 1996 Percy failed to ensure: (1) that MGUTM through MGIFM was taking all reasonable steps and exercising all due diligence to avoid the property of European Growth being used or invested contrary to RSR 5.09(2); and (2) that MGIFM was acting with due skill, care and diligence to ensure that the property of Capital Growth was being managed in accordance with Sections 45 and 46 of the UCITS Regulations; in that on being informed by senior management and the compliance department in April 1996 that the level of unlisted securities in European Growth was approximately 33% and that all documentation to demonstrate compliance with RSR 5.09(2) and/or Sections 45 and 46 of the UCITS regulations was not at that time available to the compliance department he did not: (i)ensure that senior management and/or the compliance department obtained full information as to precisely what documentation was unavailable; (ii) ensure that senior management and/or the compliance department obtained all such documentation swiftly; (iii) ensure that senior management and/or the compliance department properly and fully investigated whether European Growth and Capital Growth complied with RSR 5.09(2) and Sections 45 and 46 of the UCITS Regulations; (iv) require the compliance department to investigate and report on how the above state of affairs had been allowed to occur. IN BREACH of Rule 5.1(4) of Chapter VII of the IMRO Rules. INVESTMENT MANAGEMENT REGULATORY ORGANISATION LIMITED

KEITH PERCY STATEMENT OF CHARGE

Date: 6th 103m 1999 Ref: kep.soc.1.jjp.doc Charge 2 - Use of Corporate Action Vehicles From April 1996 until August 1996, Percy, by failing to act, was one of the individuals who caused MGIFM and thereby MGUTM to breach the RSRs and UCITS concerning unlisted securities, spread and concentration (RSRs 5.09(2), 5.14 and 5.10 and UCITS sections 45, 46 and 54) and Principle 2 of the Statements of Principle, in that he did not: (1) take all reasonable steps and exercise all due diligence to avoid the property of European Growth being used or invested contrary to RSRs 5.09(2), 5.14 and 5.10; (2) act with due skill care and diligence to ensure that the property of Capital Growth was managed in accordance with Sections 46, 49 and 54 of the UCITS Regulations and the Capital Growth Prospectus; in that he did not, having previously been informed of the existence of unlisted companies (which Percy first became aware in August 1996 had been created and utilised to hold or acquire holdings in European Growth ("the Corporate Action Vehicles")), on being informed in April 1996 that the level of unlisted securities in European Growth was 33%: (i) require senior management and/or the compliance department to investigate thoroughly the Corporate Action Vehicles and satisfy themselves as to whether they were proper investments for European Growth; (ii) require senior management and/or the compliance department to take legal advice and/or to consult the Trustees of European Growth as to whether the Corporate Action Vehicles were proper investments for European Growth. IN BREACH of Rule 5.1(4) of Chapter VII of the IMRO Rules. INVESTMENT MANAGEMENT REGULATORY ORGANISATION LIMITED

KEITH PERCY STATEMENT OF CHARGE

Date: 6th 103m 1999 Ref: kep.soc.1.jjp.doc Charge 3 - Internal Procedures

From April 1996 until August 1996 Percy by failing to act was one of the individuals who caused MGIFM and thereby MGUTM to breach Rule 1.1(1) of Chapter IV of the IMRO Rules and Principle 9 in that he: (1) failed in April 1996 or at any time thereafter to ensure that senior management and/or the compliance department sought legal advice and/or consulted the Trustees of European Growth and Capital Growth as to whether the Corporate Action Vehicles and securities held through them were proper investments for European Growth and Capital Growth; (2) failed in May 1996 or at any time thereafter on becoming aware that not all documentation was available to the compliance department, to ensure that senior management and/or the compliance department obtained the documentation on unlisted securities swiftly; (3) despite deciding at the end of July 1996 that disciplinary or other remedial action against the fund manager of European Growth and Capital Growth was appropriate, did not proceed with such action because there was still insufficient information and documentation available concerning the securities held in European Growth and Capital Growth, and because of absences of relevant senior management. IN BREACH of Rule 5.1(4) of Chapter VII of the IMRO Rules. INVESTMENT MANAGEMENT REGULATORY ORGANISATION LIMITED

KEITH PERCY STATEMENT OF CHARGE

Date: 6th 103m 1999 Ref: kep.soc.1.jjp.doc Charge 4 - Failure to Inform IMRO From April 1996 until August 1996 Percy by failing to act was one of the individuals who caused MGIFM and MGUTM to breach Rule 2.1(5) of Chapter VI of the IMRO Rules and Principle 10 of the Statements of Principle in that in relying wholly on the compliance department which advised him, in response to his enquiries, that certain matters did not need to be notified to IMRO he did not obtain an independent opinion, inform IMRO, or ensure that IMRO was informed of the matters set out below: (i) in early April 1996 that 33% of the assets of European Growth were invested in unlisted securities; (ii) that as at April 1996 not all documentation relating to unlisted securities was available to the compliance department; (iii) that the risk profile of European Growth had become inappropriate for a fund of that nature;

(iv) in June 1996, that the documentation on newly issued or unlisted securities (which in early June 1996 represented approximately 34% of European Growth and in late June 1996 represented approximately 20% of European Growth) was reported in a memorandum to be outdated or completely lacking and that unlisted securities representing approximately 10% of European Growth's market value were sold at a price significantly below their previous valuation; and that a further two holdings representing approximately 6% of the fund's value had been revalued downwards in anticipation of future trades; and (v) in July 1996, that he had decided that disciplinary action should be taken against the fund manager of European Growth and Capital Growth; IN BREACH of Rule 5.1(4) of Chapter VII of the IMRO Rules.